On
Modern America’s Tax System – Sales Tax
Beizhan
Liu
The United States is the most
developed country in the world today. The United States not only creates and
owns the most advanced technologies in the world, but also has the most
developed financial and financial service system in the world. The US tax
system is also very representative. However, many years ago, during my
interactions with Americans, I suddenly discovered that the sales tax [1] [2] in the US tax system seems to be
very imperfect, neither unified nor comprehensive. To improve the U.S. tax
system and modernize the U.S. tax system, it is necessary to reform sales tax
and establish a unified and comprehensive sales tax.
The tax system was originated
from ancient Egypt in 3000-2800 B.C.[3] . The establishment of the tax
system is to maintain the operation of a government. The earliest use of sales
tax was in the ancient Greek port city of Piraeus in 415 B.C.[4]
. In the United States, West Virginia was the first state to install sales tax.
In 1933, 11 states followed and began to install sales tax. In 1940, a total of
18 states adopted sales tax [5]. Currently (as of 2017), a total
of 45 states in the United States, as well as the District of Columbia, Puerto
Rico and Guam, have adopted sales tax, and 5 states (Alaska, Delaware, Montana,
New Hampshire and Oregon) have not yet installed sales tax. Sales tax is levied
by the state government, and the federal government has not yet levied a
sales tax [6].
From an international point of
view, currently there are about 179 countries that have adopted sales tax [7], which means that most countries
have adopted sales tax. Canada’s sales tax is unified (HST), that is, the
federal sales tax and the provincial sales tax are unified, which is equivalent
to only one tax [8]. The Australian federal
government collects a sales tax (GST) and distributes it to the states, but the
state government also partially collects similar stamp tax [9].
The improvement of the US tax
system firstly lies in the federal government adopting and levying sales tax.
In the case of consensus, it can be unified with the sales tax of each state,
like Canada, and become a unified sales tax. The scope of the levy can be
comprehensive and all-round, with the exception of basic dietary goods and
services.
The adoption of sales taxes by
the US federal government is not just a matter that is in line with
international taxation practices. It is a project to perfect the main beam of the house. Theoretically speaking, a
country’s taxation mainly lies in three aspects: income tax, social security
tax, sales tax, and then other taxes. Sales tax has extensiveness
and apportionment
(individual, time).
For a single taxpayer, sales tax will not bring great economic burdens, let
alone bring impulse economic burdens. For the federal government, due to its
extensiveness, it can bring huge tax revenues. Because of this, most countries
in the world adopted sales tax.
The implementation of sales tax by
the America federal government has the following great significance:
•
The implementation of federal sales tax in the United States is one of the most
important measures for the modernization of the US tax system;
•
The implementation of federal sales tax in the United States is a main beam project
of the U.S. tax system;
•
The unification of the US federal sales tax with the state sales tax will
simplify the US tax system;
•
The implementation of the U.S. federal sales tax will bring huge tax revenue to
the U.S. federal government. For example, if the U.S. federal government levies
a 5% sales tax, it will bring about 642.85 billion U.S. dollars in revenue to
the U.S. federal government every year (according to relevant data calculation [10]);
•
The implementation of the US federal sales tax will help to eliminate the
federal fiscal deficit at an early date and improve the government’s financial performance;
•
The implementation of the US federal sales tax will bring sufficient financial
support to the improvement of the infrastructure and people’s livelihood in the
United States.
The improvement of the U.S. tax
system, that is, the modernization of the U.S. tax system, must first concern the
implementation of the federal sales tax. This is not only a requirement of
taxation theory, but also a need of reality in the United States. Of course,
the improvement of the U.S. tax system is not just this, there are more aspects
which need to be researched and developed by theory researchers and industry
practitioners. I also expect more experts to support my point of view.
(Beizhan
Liu,a Canadian
entrepreneur, inventor and economist; revised on 2021-10-17)
